The Long River Group Limited (CK Group) founded by Li Ka-shing announced a one-third price reduction for some residential projects in Hong Kong’s New Territories on May 19, marking another round of discounts in response to China’s new property policies. Experts believe that Li Ka-shing’s move reflects a lack of confidence in the future market. As a barometer of the Chinese economy, Li Ka-shing is strategically positioning himself to mitigate risks by relocating assets out of Hong Kong.
On May 17, China introduced a series of new measures aimed at revitalizing the real estate industry, including state intervention to purchase excess properties, lowering mortgage down payments, and removing interest rate limits for first and second homes.
On May 19, the CK Group conducted a public sale for the residential project “#LYOS” in the northwestern region of Hong Kong’s New Territories, offering discounts of up to 25% for flat units and approximately 32% for garden duplex units compared to the initial sale prices.
This is not the first time CK Group has lowered prices. Back in August 2023, the group offered the lowest prices for its New Kowloon project “Kin Hai Station II,” undercutting surrounding second-hand properties by thirty percent, setting a new low in New Kowloon’s new project market over the past seven years.
Moreover, on the prior 6th of last month, CK Group’s debut of the Blue Coast project at South Island’s MTR station in Hong Kong priced units 6000 Hong Kong dollars lower than other developments in the area, equivalent to a 30% discount. The launch day saw all 413 units sold out, amounting to almost 7.5 billion Hong Kong dollars in sales and breaking the record for the highest single-day sales in Hong Kong’s new property market in the past decade.
Former Chief Compliance Officer of a mainland asset management company, Leung Siu-wah, emphasized to a reporter from Da Ji Yuan that Li Ka-shing has long been a beacon for China’s economy. “Before Xi Jinping came to power, his relationship with the Chinese government, including Deng Xiaoping, Jiang Zemin, and Hu Jintao, was good. Thus, in mainland China, he invested heavily in real estate and made substantial profits. However, since Xi Jinping took office, his fundamental outlook on the political and economic landscape has changed significantly. He has been liquidating assets and transferring them predominantly to Europe, America, and the UK.”
Economist David Wong, currently residing in the United States, also told a Da Ji Yuan reporter that Li Ka-shing’s timing and pace in real estate sales have been spot on. “As early as 2013 and 2014, Li Ka-shing was promoting most of his domestic projects within China. There were even domestic news reports warning not to let Li Ka-shing escape. When China faced economic crises and stock market crashes in 2015 and 2016, his accuracy was apparent.”
Wong believes that Li Ka-shing’s strategic planning is a form of risk aversion. “Given his longer-term perspective, he typically positions himself about two years in advance. He tends to strike when the market begins to rebound, rather than at its peak.”
He emphasized, “Due to the large scale of Li Ka-shing’s company, his actions often indicate a major market reversal about one to two years or even two to three years later, serving as a meaningful reference point.”
Leung Siu-wah opined that Hong Kong’s prosperity is closely tied to its press freedom and rule of law. “Once these elements erode, the vibrancy that sets Hong Kong apart from the mainland diminishes.”
“So, it is possible that Hong Kong may gradually morph into a city like Shenzhen, Beijing, Shanghai, and Guangzhou with nothing unique to offer. Unsustainable high property prices and certain policies are on an inevitable downward trajectory.”
He stressed that the level to which prices will decline remains uncertain, thus investment demand faces significant pressure. “While policies may temporarily stimulate demand and boost transaction volumes, once this demand exhausts its momentum, it cannot sustain stable or rising property prices. Overall, a downward trend is inevitable.”
David Wong further noted that in recent years, especially after losing its status as an Asian financial center and a global financial hub, Hong Kong’s property market support base has shifted significantly.
“We have observed prominent foreign companies relocating from Hong Kong to destinations like Singapore, Seoul, and Tokyo. Consequently, the group that previously propped up high property prices and rents in Hong Kong has largely moved abroad.”
He elaborated, “Due to the economic challenges in mainland China, on which Hong Kong previously relied, economic growth has been lackluster. Presently, uncertainty and difficulties abound in various sectors, including real estate, manufacturing, international trade, and international relations.”
“Therefore, Li Ka-shing’s decision to divest early in some Hong Kong projects is perceived as a prudent risk mitigation strategy by many.”